AstraZeneca Cancer Drug Coveted by Pfizer Shows Promise in Trial

May 14, 2014 7:00 pm ET

May 15 (Bloomberg) -- AstraZeneca Plc said an experimental cancer drug shrank tumors in half of patients in an early-stage study, a result that may help its case that Pfizer Inc.’s takeover bid substantially undervalues the company.

The drug, called AZD9291, is designed to help patients with a gene mutation found in 15 percent of Caucasian patients with non-small cell lung cancer, and 40 percent of Asians. If approved, it could generate more than $2.2 billion by 2025, said Seamus Fernandez, a Leerink Partners analyst in Boston.

The findings were released in connection with the American Society of Clinical Oncology meeting that will start May 30 in Chicago. AstraZeneca Chief Executive Officer Pascal Soriot said data from the meeting, combined with other pipeline findings coming later this year, should convince investors that Pfizer’s bid of about 48 pounds ($81) a share sells the company short.

“ASCO is important but it’s one step,” Soriot said in a telephone interview yesterday. “We hope as we progress this year, investors will become more convinced there is more value in this company than what is offered to us.”

Data from a trial on a separate AstraZeneca lung cancer medicine, called MEDI4736, will also be presented at the meeting. That experimental drug is an antibody designed to inhibit a protein, called PD-L1, that helps some cancers avoid being detected and attacked by the immune system.

AstraZeneca announced May 8th that it started a final stage study of MEDI4736 in patients with a certain type of inoperable lung cancer to see if it improves survival when used following chemotherapy and radiation.

‘Bump Up Interest’

Positive data from AstraZeneca at the cancer meeting may pressure Pfizer to raise its offer price, though much of the expectation of the drugs’ success has already been baked into the AstraZeneca share price, said Vamil Divan, an analyst with Credit Suisse Group AG in New York.

“It could bump up the interest level by Pfizer a little bit, or the price a little bit,” Divan said by telephone.

AstraZeneca could also get a benefit if drugs from other companies show that the immune-oncology treatments work beyond lung cancer and melanoma, he said. “The whole meeting is going to be very immune-oncology-heavy, and we’ll get a sense of the potential of this class of agents,” Divan said. “If it does look like that class is big, that bodes well for Astra.”

Pfizer, based in New York, made an initial offer of about 46.60 pounds in January, citing both the London-based company’s promising product pipeline and the ability to change its headquarters to the U.K. to gain a corporate tax cut.

Pfizer Testimony

Pfizer Chief Executive Officer Ian Read told U.K. lawmakers yesterday a deal would help allow the combined company to challenge the current leaders in oncology, Roche Holding AG and Novartis AG. AstraZeneca disagrees.

“We think our oncology pipeline is incredibly strong and can compete with Novartis and Roche in its own right,” Mene Pangalos, vice president of innovative medicines at AstraZeneca, said yesterday. “It can stand on its own two feet.”

AZD9291 is an epidermal growth factor inhibitor that works by impeding the uncontrolled cell growth that is cancer. In the early-stage trial reported yesterday, the drug was studied in 199 patients. Among those with the gene mutation known as T790M, 64 percent responded positively.

Therapy Option

“Although it is still a bit early, our study suggests that AZD9291 may offer an effective new therapy option for these patients,” without side effects seen from other similar treatments, said Pasi Janne, the lead author and a professor of medicine at Harvard Medical School in Boston.

AstraZeneca is also likely to pair the drug with MEDI4736 in a combination trial that has a “strong scientific rationale,” Leerink’s Fernandez said in a note yesterday. “AstraZeneca’s recent series of data releases highlights what we continue to believe is one of the best mid- to late-stage pipelines within all of biopharma,” he wrote.

AZD9291 faces competition from Clovis Oncology Inc. while MEDI4736 is expected to compete with therapies by Bristol-Myers Squibb Co., Merck & Co. and Roche. AstraZeneca is also developing olaparib, an ovarian cancer drug, which Soriot resurrected for patients with a certain genetic mutation after being initially considered a failure.

“Our pipeline has changed dramatically over the last 18 months and we’re focused on delivering that pipeline,” Soriot said.

--With assistance from Robert Langreth and Drew Armstrong in New York.